World Bank retreats from Nigeria

June 23, 1997 The World Bank has cut its budget on Nigeria by 20 % while the number of its projects in the country has also been reduced from over 20 to 12. The decision to cut down the projects was made against the background that the bank's commitments to Nigeria had not been yielding the desired results.
A senior official of the bank in Nigeria has described the unsatisfactory result as a development attributable to the distortions in the Nigerian economy, Business Times reported today.
The official did not elaborate the distortions but suggested that they should be removed if confidence was to be elicited from the bank. He said the bank has decided to shift attention to other African countries for further investment. According to the report, the bank has started recalling some of its key officials from Nigeria to its headquarters in Washington and embarked on some restructuring exercise including retrenchement of workers in its office in Lagos, Nigeria's economic centre.
The consultants and contractors of the bank have been put on the alert about the unfolding development with many of them having been told to leave as soon as their contracts lapse.Although existing projects would continue to be financed by the bank when due, fresh financial commitment may not be considered, the report said. It said the World Bank has frowned at the retention in Nigeria's 1997 budget of the dual exchange rates system, saying such commitment would not allow for proper accounting and budgetary implementation. Other grey areas to the bank include suspension of the privatisation of government parastatals and the closure of certain sectors of the economy to private investors.
The Nigerian government has in the past few years made some remarkable improvement in maintaining stability in the exchange rate, reducing inflation rate to below 20 % and opening up the economy through the promulgation of new investment decrees. However, the World Bank believes much can still be done to provide a more favourable investment climate.
Observers noted that the 5.5 % targeted growth rate at the end of this year is being threatened by falling consumer purchasing power and low industrial capacity utilisation, with some experts recommending an action plan capable of activating the productive sectors. Meanwhile, the lingering fuel crisis in one of world's leading oil producing countries since the beginning of this year has almost paralysed commercial and social activities in such big cities as Lagos.